He is an expert on energy strategy and economics, described as “one of the energy world’s great minds”. he led major consulting assignments and for a variety of international oil companies on Los Angeles business development

Ikea has a new product line for UK homeowners — batteries for their rooftop solar systems.

On Wednesday, the Swedish home furnishings superstore unveiled an offering that combines solar panels from UK partner Solarcentury and lithium-ion batteries from LG Chem, coming in 3.3 kilowatt-hour and 6.5 kilowatt-hour combinations.

Ikea’s announcement states a starting price for the combo system is “as little as £3000,” or nearly $4,000, including a 15-percent discount for IKEA Family members. But it also cites some significantly higher prices later on, including an installation price starting at £6,925 ($9,157) for a complete system, or about £5,000 ($6,612) for adding a battery to a home that already has PV.

But Ikea also estimates the systems will save homeowners up to £560 ($741) per year, or about 67 percent more than the savings from solar panels alone, allowing for a 12-year payback for a typical customer, or a 6-percent annual return on investment.

This figure has a lot of caveats, of course. It’s built on a typical London home with a south-facing, pitched roof, with a family that’s only at home during weekday afternoons and evenings. Ikea’s FAQ page has a lot of other disclosures, such as the fact that most solar-battery systems will also shut down if the grid goes down, unless they’re specially engineered to serve as backup power.

But the economics of Ikea’s offer are similar to those that have driven a boom in residential solar-storage systems in Germany — the differential between the feed-in tariff rates that solar systems earn for power exported to the grid, and the retail rates that customers pay for grid electricity.

In the UK, FIT rates currently stand at 4.07 pence per kilowatt-hour for solar PV systems under 10 kilowatts, with an increase to 5.03 pence per kilowatt-hour for energy exported to the grid. But average electricity prices stand at about 12 pence per kilowatt-hour, providing clear incentive to customers to use as much of their own solar energy as possible.

This discrepancy is likely to increase in years to come. While feed-in tariff rates are currently set to increase by 2.5 percent per year, UK utilities have recently announced plans to increase electricity prices, by as much as 12.5 percent for utility Centrica.

Most solar-equipped homes only use about 40 percent of the power their panels generate, saving a typical home about £380 in the first year, Ikea estimated. Adding a battery that can boost that self-consumption proportion to 80 percent of a home’s power draw could increase that first-year savings to as much as £560 — nearly as much as the average annual household electricity bill of £584.

The new offering could also see a big boost by the UK government’s plan, announced last month, to invest £246 million (USD $321 million) in battery research and development, including a plan to increase smart energy technology penetration in homes and businesses.

The U.S. residential solar-storage market doesn’t feature the same discrepancy between feed-in tariffs and retail rates that are boosting the nascent market in Germany and the UK. That’s made for a slower-to-develop market, with companies like Tesla and Sonnen largely selling their batteries on their use as backup power systems at present. They’re also mainly operating in states like California that offer lucrative incentives for behind-the-meter storage, or Vermont, where regulators have allowed utilities to create pay-per-month offerings for customers interested in solar-plus-storage

Still, the rise of time-of-use rates that punish electricity use in late afternoon and early evening, as well as the potential for solar-storage systems to augment grid stability, could increase their value over time. Meanwhile, lithium-ion battery prices are expected to continue to fall in price, reducing the cost side of the equation.

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Published by germanjamison

He established Qamar Energy to meet the need for regionally-based v energy insight and investment. He is an expert on energy strategy and economics, described as “one of the energy world’s great minds”. he led major consulting assignments and for a variety of international oil companies on Los Angeles business development, integrated gas and power generation and renewable energy. German authored the ground-breaking study Sunrise in the Desert: Solar becomes commercially viable in MENA, on solar power competitiveness in the Gulf
View all posts by germanjamison

German Jamison

He established Qamar Energy to meet the need for regionally-based v energy insight and investment. He is an expert on energy strategy and economics, described as “one of the energy world’s great minds”. he led major consulting assignments and for a variety of international oil companies on Los Angeles business development, integrated gas and power generation and renewable energy. German authored the ground-breaking study Sunrise in the Desert: Solar becomes commercially viable in MENA, on solar power competitiveness in the Gulf